Life (or Death) Of An Orange County Restaurant Deal


Life Of A Restaurant Deal

How many of slices do I need to sell to pay a $7,000 rent?

Answer: At three dollars a slice, A lot!  I'm still negotiating the rent for this pizza place we are selling in Laguna Beach, California.  The location of this 750 sq ft establishment is right on Pacific Coast Highway and in the heart of down town Laguna Beach.

Originally I had the pizza shop listed and $150,000 with annual gross sales of $600,000, and after a week of being on the market had multiple offers.  As the buyers were doing there due diligence it kept falling apart, because the seller didn't have very good books and records and we were selling it in the off months, so visual observation wouldn't work.  Finally I convinced the seller that he could only sell it for what he could prove which roughly around $380,000 a year plus some was catering.

The listing created a lot of interest, because the seller was doing alright, but wasn't doing any delivery at all, which a new buyer could create some additional income.  I finally found an experienced buyer who could look into the seller's receipts, register tapes, and P&L reports and make sense of what the store was doing.

The buyers offered $100,000 with 50%, owner carry, and so we proceeded to contact the landlord.  I had to negotiate a new lease, because the current owner, my client was on a month-to-month lease (paying $5,200 a month).  While the store was on the market I had a few friends tip me off that the Mr. Landlord was actually trying to lease the space out, while we were trying to sell it, and it had been on the market for about 90 with no takers. The landlord had it advertised for $6,250 and told all the potential leasee, that it of course excluded the fixtures and equipment that the present (my client) had in the store.  Well we finally set up a meeting between the Landlord and the Buyers. The buyer Lives in Corona Del Mar and has about a million dollars in the bank, 5 $100,000 CDS, and a lot of experience"he is actually co-signing for his niece and her fiance oh he also has Fico scores in the high 700s.  The Landlord sits down with my clients and says "The rent is $6,500 with about $350 in CAM charges and a cost of living of 3 to 4% a years."  The buyers flipped out, and walked. The seller's temper went through the roof, and right before he could stop paying rent for a couple months, and loose his security deposit, the landlord served him with a 3 day write of pay or quit.

Well, I thought everything was pretty much dead, until the seller called and told me that the landlord served him with some legal papers saying he couldn't take out his fixtures and equipment and that he was just kicking him out".(sounded a little funny to me, and I've been doing this for a while.)  A few days later I figured out that the buyers were planning to just give the seller $40,000 and then just take a new lease from the landlord with no escrow.  I reminded the buyers that they had signed a Non-Disclosure, which said for a year they couldn't purchase or acquire the business in any way.

Well, now I'm dealing with the Landlord's son, who is lawyer, negotiating on behalf of his father, and the seller still wants to sell, the buyers still want to buy (with a expectable lease, of course) and so we'll see how everything works out - stay tuned . . .

Categories: BizBen Blog Contributor, Deal And Escrow Issues

Contributor:

Joe Ranieri
Areas Served: Orange, Los Angeles County Areas
Phone:  714-292-5448 Cell, 714-292-5448 Text
Having owned retail/restaurant businesses for over 20 years, my interest turned to selling businesses rather than owning them. I specialize in LA & Orange County restaurants, fast food independents and chains, bars, & liquor stores. Call 714-292-5448 Cell/Text.






  Helpful Resources To Assist In Selling And Buying California Businesses
Jack Oh, Business Broker: Southern California

Business broker and real estate services in the Los Angeles and Orange County areas. 10 years experience with great negotiating skills. To sell a business or buy a business in the LA or Orange County Areas phone Jack and his team at 562-787-4989 Cell / Text.

Peter Siegel, MBA: Business Purchase Financing Solutions

Niche business purchase financing advisory and loan placement services with SBA and Non-SBA Financing, Retirement Fund Rollover Solutions, Combo Financing Packages. To get professionally pre-qualified or more information on the ProBuy/ProSell Programs: 925-785-3118.

Peter Siegel MBA, BizBen Founder, ProBuy, ProSell, ProIntermediary Programs

Founder Of BizBen.com (since 1994). I am the Lead Advisor for the ProSell, ProBuy, & ProIntermediary Programs. I consult daily with buyers, sellers, and brokers daily about buying and selling California small to mid-sized businesses. Call 925-785-3118.

Rick Carlson, Business Broker - Southern California

You Will Never Feel Lost In The Shuffle. Many Brokers Simply Send Out An NDA And That's The End Of Communication. All Buyers Receive A Personal Meeting With An Ace Acquisition Specialist So They Can Recommend The Perfect Business For You. Phone Rick direct at 800-985-4939.

William Park, Business Broker: Southern California

Highest Volume Broker in California, Simply Check our HUNDREDS of Listings! Over 25 Associates, Speaking Dozen Languages, Helping Buyers and Sellers of Small Business since 1982, Centrally Located between Los Angeles and Orange Counties, while Riverside & San Bernardino Counties are Very Accessible.

Michael Davidson, Business Broker - Southern California

Los Angeles Business Broker providing M&A quality services for Small Business Owners. We leverage our technology and expertise to Simplify & Expedite the Business Sales Process. Matching the right buyer with the right business is how we define success.

Mike Brewer: Liquor License Broker, ABC Consulting Service

Liquor license brokerage and consulting services. We provide: Alcohol License Transfers Application Consulting & Processing, Liquor License Purchases & Sales, City Zoning Permits & Land Use Entitlements, Public Convenience or Necessity Findings and Letters. Phone Mike Brewer direct at 800-437-1100.

Steve Zimmerman: Restaurant Broker Specialist, California

Steve founded Restaurant Realty in 1996. He has personally sold/leased over 1000 restaurants, bars & clubs, & completed over 3000 valuations. The author of "Restaurant Dealmaker- An Insider's Trade Secrets For Buying a Restaurant, Bar or Club" available on Amazon. Reach Steve direct at 415-945-9701.


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Buying A Restaurant Can Be Challenging: 3 Key Tips For Restaurant Buyers...
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